Financial Advisors: Expectations vs Reality

A good financial advisor can help set financial goals, create a plan and implement that plan to help you reach your goals. They get to know you and understand your personal finances. But far too often, people have unrealistic expectations and fail to realize that the true value of an advisor lies in their ability to guide, educate, and hold their clients accountable. 

If you’re considering working with a financial advisor, it’s important to have realistic expectations about their services.

What Should You Expect from a Financial Advisor?

A financial advisor shares their wisdom, guidance and knowledge with their clients. However, you do need to be a part of the investment process and have an opinion on how your money is invested and where.

You should expect a few things from your advisor:

Guidance and Wisdom

A good advisor will go beyond just managing your portfolio. A good advisor will also provide guidance and wisdom. They will explain things in a way you can understand, empowering you to take a more active role in managing your portfolio.

For example, your advisor may recommend a 33/33/33 portfolio to you, which is investing:

  • 33% in stocks
  • 33% in bonds
  • 33% in alternatives

Due to market changes, many people are moving away from the 60/40 portfolio. Your advisor may come along and recommend that you change your portfolio structure to reflect the 33/33/33 model. If they do, a good advisor will take the time to explain their reasoning behind the change and how such change aligns with your future goals. 

Accountability and Honesty

A financial advisor’s job is to help you reach your financial goals and provide accountability to help you reach those goals. 

The best financial advisors are also honest and not afraid to say no. If an investment decision or retirement plan isn’t going to be in your best interest, they will tell you the hard truth. It may not be what you want to hear, but your advisor’s goal is to help you make the best financial decisions. That said, a good advisor will also investigate other options to see if a different investment or plan can help you reach your goal.

Along the way, your advisor will hold you accountable and help you stay on track.

Advice on More Than Just Investments

Many people assume that financial advisors are there to help with investments and nothing more. Their only job is to help clients beat the market. However, a good advisor will provide you with more than investment guidance.

Remember that it’s your advisor’s job to help you reach your financial goals, which means looking at the bigger picture.

Your financial advisor should be looking at: 

  • Your overall financial situation
  • Your values and philosophies
  • Your ability to save

All of these factors will affect your ability to reach your goals and improve your financial health. Your financial goals are a part of the bigger picture. If you’re investing, there is a goal for the money.

Perhaps you’re investing for retirement, and the goal is to retire comfortably.

However, what is a comfortable retirement? It’s different for everyone based on their individual goals. For example:

  • Do you want to maintain the same lifestyle where you spend $6,000 a month?
  • Do you plan on having your home and debt paid off and living a simple life with fewer expenses?
  • Do you want to travel the world?
  • Do you want to help pay for your grandkids’ wedding?

An advisor can provide advice on all of these things to help you reach your goals. Taking a proactive approach to financial planning is the key to success.

A Proactive Approach

When working with a financial advisor, you should expect them to be proactive rather than reactive. A reactive approach tends to be more costly to clients in the long-run because an action is only taken after something happens, like an economic downturn or a major life event. 

Planning ahead and preparing for such situations will make it easier to weather the storm and adjust your financial plan accordingly. 

Being proactive also means being in regular contact with you to see how your finances and life situations may have changed. Maybe your business is growing, or you’re planning to get married. Both situations will warrant a review of your portfolio and goals to ensure they’re aligned with your current situation. 

If your advisor isn’t checking in regularly, they won’t be aware of major life changes that will impact your finances now and in the future. While you shouldn’t have to chase down your advisor just to schedule a phone call or meeting, you also need to be proactive in the relationship and reach out when events come up that warrant your advisor’s attention. A successful client-advisor relationship requires that both parties are proactive. 

Similar Values and Philosophies

Not every financial advisor will have the same values and philosophies as you, but it’s important to find one who does. 

You and your advisor need to be on the same page. Otherwise, you may find yourself disagreeing with most of what your advisor recommends. If you do not see eye to eye, it may be difficult to have trust and confidence in your advisor. 

It’s crucial to spend time finding an advisor that you meld with. Additionally, if your values and philosophies change over time, you have a right to change advisors. An advisor needs to help you reach your goals at every stage in life. While you may be friendly with the advisor you have, you’re in a business relationship, and the relationship needs to meet your needs.

Final Thoughts

Financial advisors don’t have crystal balls. They can’t predict the future – no one can. However, they do have the experience, knowledge, and education to provide advice and guidance to help you reach your goals. 

A good advisor will act as that – an advisor. They will work alongside you, hold you accountable and help you stay on course to reach your financial goals. Having realistic expectations of what your advisor can offer will help you find satisfaction in their service. 

To learn more about how KPN Enterprises can help you with financial planning or to schedule a call, contact us here.